The Hong Kong Government and China’s Supreme People’s Court on 2nd April 2019, entered into a landmark arrangement that would allow parties, for the first time, to arbitration seats outside of mainland China to obtain interim relief protection from the Chinese Courts that would be enforceable in China. The Arrangement made, is reciprocal and allows parties to China-seated arbitrations to obtain similar sort of protection from the Courts in Hong Kong.
For the local and international business communities, the Arrangement has significant implications. Previously, such protection was available only if the parties opted for an arbitral seat in the peripheries of Mainland China. However, given the well-established legal and arbitration system in Hong Kong, numerous international parties have opted to adopt Hong Kong arbitration, foregoing their ability to obtain interim relief in China. For the first time then, the Arrangement would allow parties to opt Hong Kong arbitration, while at the same time it would allow them, if needed, to obtain the interim relief protection in China.
This development, on a macro-level, comes at an important juncture. This development is closely tied to the myriad of positive steps that China has taken in recent years so that it could amend and bring its arbitration and related laws, judiciary and legal framework into the modern era. The Arrangement focuses on the implementation of key policy initiatives such as the Greater Bay Area Initiative (GBA) and the Belt and Road Initiative (BRI). The Arrangement has also taken the responsibility to consolidate and enhance Hong Kong’s role as key legal services and disputes hub for the region.
The Arrangement is planned to be applied to Hong Kong-seated arbitrations that are established by relevant arbitral institutions or permanent offices of international intergovernmental organizations of which China is a member. The list of the permanent offices and relevant institutions is being prepared by the Hong Kong Government along with the Supreme People’s Court. These would be including the HKIAC and possibly the ICC and CIETAC Hong Kong.
In order to secure the interim relief there is a two-way process:
1. A party to the Hong Kong arbitration may bring an application for interim relief accompanied by the relevant supporting information and material to the permanent officer or relevant arbitral institution; and
2. The permanent office or the relevant arbitral institution will then forward the application to the relevant Mainland Chinese Court.
The Arrangement will then have retrospection effect and will apply to arbitrations commenced before the Arrangement enters into force.
If the interim relief protection holds key importance in the investment or project of parties, at the negotiation stage, then they will be able to opt for Hong Kong-seated institutional arbitration in the safe knowledge that not only will their dispute be handled and finally resolve according to a well-established arbitration and legal framework and best practices but they also will be able to obtain interim relief protection from the Courts in Mainland China and when needed.
The parties’ options for the non-Hong Kong-seated arbitrations remain unchanged.
It is advised to seek appropriate legal advice in order to benefit from the Arrangement. It would be sensible on the part of the parties to ensure that their arbitration clause clearly and unequivocally:
- Designates Hong Kong as the seat or legal place of arbitration; and
- Specifies that the arbitration shall be administered under one of the confirmed permanent offices and relevant institutions.
For a long time, Hong Kong has been regarded as the preferred seat for China-related arbitrations. The Arrangement will focus on enhancing the role and status of Hong Kong and would make it even more attractive now for the parties to opt for Hong Kong arbitration.